MCA Establishes Central Registration Centre for Reservation of Names

By way of a Notification
dated 22nd January 2016 and in order to encourage incorporation of
companies, the MCA has established a Central Registration Centre (CRC) having
territorial jurisdiction all over India for discharging or carrying out the
function of processing and disposal of applications for reservation of names
under the provisions of the Companies Act, 2013. The CRC shall be
located at Indian Institute of Corporate Affairs (IICA)[1].
The CRC has been established to facilitate smoother functioning and fastening
the processing of incorporation applications, it is expected to look into the applications for name
availability (INC-1 e-forms) submitted online across the country and to process the same by the end of the very next working day. Thus, CRC not only promotes
uniformity in application of incorporation rules but also encourages
incorporation of companies.

The CRC shall function under the administrative control of
Registrar of Companies, Delhi (ROC Delhi), who shall act as the Registrar of
the CRC until a separate Registrar is appointed to the CRC. The CRC shall
process applications for reservation of name i.e., e-Form No. INC-1 filed along
with the prescribed fee as provided in the Companies (Registration of Offices
and Fees) Rules, 2014. Processing and approval of name or names proposed
in e-Form No. lNC-29 shall continue to be done by the respective Registrar of
Companies having jurisdiction over incorporation of companies under the
Companies Act, 2013 in accordance with the provisions of the Act and the rules
made thereunder.

Further, in order to
facilitate the incorporation of companies, MCA on the same day has amended the Companies
(Incorporation) Rules, 2014, through the Companies
(Incorporation) Amendment Rules, 2016. Both the circular and the amended rules shall be
effective from January 26, 2016. In this regard, set out below is a tabular
comparison between the erstwhile Incorporation Rules and the amendment brought therein:

it
is not in consonance with the principal objects of the company as set out in
the memorandum of association;

Provided
that every name need not be necessarily indicative of the objects of the
company, but when there is some indication of objects in the name, then it
shall be in conformity with the objects mentioned in the
memorandum

Omitted

Now​ ​the proposed name of the company shall be considered
desirable even if it is not in harmony or compatible with the principal
objects of the Company.

8(2)(b)(x)

the
proposed name is vague or an abbreviated name such as ‘ABC limited’ or ‘23K
limited’ or ‘DJMO’ Ltd: abbreviated name based on the name of the promoters
will not be allowed. For example:- BMCD Limited representing first alphabet
of the name of the promoter like Bharat, Mahesh, Chandan and David:

Provided
that existing company may use its abbreviated name as part of the name for
formation of a new company as subsidiary or joint venture or associate
company but such joint venture or associated company shall not have an
abbreviated name only e.g. Delhi Paper Mills Limited can get a joint venture
or associated company as DPM Papers Limited and not as DPM Limited.

Omitted

The restrictions on the use of abbreviated name based on
promoters are done away with. Therefore, now the abbreviated name of company
based on the name of the promoter will be allowed.

8(2)(b)(xvii)

it is intended or likely to produce a
misleading impression regarding the scope or scale of its activities which
would be beyond the resources at its disposal

Omitted

​Now there is no need to show the scope or scale of
activities in the proposed name of Company.

8(3)

If
any company has changed its activities which are not reflected in its name,
it shall change its name in line with its activities within a period of six
months from the change of activities after complying with all the provisions
as applicable to change of name.

Omitted

The need to realign the name of the company, in case of
change of its activities is done away with. Therefore, now there is no
need to reflect the change in its name in line with its activities undertaken
by the company.

8(4)

In
case the key word used in the name proposed is the name of a person other
than the name(s) of the promoters or their close blood relatives, No
objection from such other person(s) shall be attached with the application
for name. In case the name includes the name of relatives, the proof of
relation shall be attached and it shall be mandatory to furnish the
significance and proof thereof for use of coined words made out of the name
of the promoters or their relatives.

Omitted

The requirement of furnishing the No Objection Certificate
(NOC) in case where the proposed name is of a person other than the name(s) of the promoters or their
close blood and proof of relationship, where the name
includes the name of relatives, have been done
away with. Therefore, such documents are not needed to be submitted
henceforth.

9

An
application for the reservation of a name shall be made in Form No. INC.1 along with the fee as
provided in the Companies
(Registration offices and fees) Rules, 2014

An
application for the reservation of a name shall be made in Form No. INC-I
along with the fee as provided in the Companies (Registration offices and
fees) Rules, 2014 which may be
approved or rejected, as the case may be, by the Registrar, Central
Registration Centre (CRC).

Introduction of CRC for facilitating incorporation process and
approval of incorporation applications.

36(12)(b)

Insertion after 36(12)(b):

(ba)
After the resubmission of the documents and on completion of second
opportunity, if the registrar still finds that the documents are defective or
incomplete, he shall give third opportunity to remove such defects or
deficiencies;’

Provided
that the total period for re-submission of documents shal1 not exceed a total
period of thirty days.

Though the opportunities for re-submitting the documents
have been increased, the total period for re-submission of documents has been
limited to a period of 30 days.

36(12)(c)

In
case, the Registrar is of the opinion that the document is defective or
incomplete in any respect after giving such two opportunities, the e-form INC-29 of the proposed company
shall be rejected.

In
case, the Registrar is of the opinion that the document is defective or
incomplete in any respect after giving such three opportunities, the e-form INC-29 of the proposed company
shall be rejected.

Now there are three re-submission opportunities instead of
two chances, which will indeed help the applicant and increase the scope of
furnishing the documents as required by the Registrar.

– Nikita Snehil

[1] IICA has been established by the Indian Ministry
of Corporate Affairs for capacity building and training in various subjects and
matters relevant to corporate regulation and governance such as corporate and
competition law, accounting and auditing issues, compliance management,
corporate governance, business sustainability through environmental sensitivity
and social responsibility, e-governance and enforcement.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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